12-22-14 was down -$1.12 and the model projects that the CME Lean Hog Index component on the 12-22-14 kill will drop between -1.00 and -1.30. The down trend is still intact with the Purchase Index being down nine days in a row.

Packers made only a fair purchase yesterday at 89.7% of the moving average daily purchases. With the holidays coming up, they probably did not need to make a very large purchase. Yesterday they had 11.29% more hogs purchased than they had on the same day last year so it would appear there was little pressure on they to line up hogs. Producers may be needing hook space, though.

The GGGs are now discounted to the index by -1..31. There is often a reduction in supply around the tenth of January. If that occurs this year, traders may have to put a little back onto the GGGs. Today the USDA will give us a report that may give us a hint about the supply of market ready hogs. Since 12/1/14 the kill has been trailing last year by about 3.10%. Based on the last H&P that is about 1.45% lower than I have been expecting. This is not pointing to expansion about to hit the market this week.

I have been scaling in and out of the Feb cattle/hog spread. This morning I have been able to partially unload my boat and can now reload if we get a bounce or I can ride it on down.

Best wishes,

dhm